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Some Of The Advantages Of Contract Hire leasing

You might be contemplating purchasing a new car for your company car pool,
or instead you may be wondering if a contract hire vehicle is better. So,
what are the reasons for selecting a contract hire vehicle more than
purchasing a new car?

Purchasing a new car does, at first, seem the sensible option. After all,
your payments give an asset that you, or your business, will own.

Vehicles Depreciate Very Quickly
But the difficulty with buying cars is that unlike property, they depreciate
more than time. Merely driving the car out of the sales room devastates the
value and the investment. So, is contract hire a suitable alternative?

For a start, contract hire and leasing will protect your business against
that depreciation that hits brand new vehicles. But obviously, you are still
paying over the long term for the vehicle.

First, The Tax Benefit
But as the car, or van, is being paid for on a monthly lease instead of
being purchased outright, you could then put the entire amount of
expenditure down on your balance sheet as costs rather than slowly writing
off the price of the vehicle over several years. So, contract hire offers a
tax benefit.

Straightforward Budgeting
Services such as basic maintenance of the car might be included in the
monthly premiums, if required. This means that you know from the outset the
exact price of the vehicle that you are acquiring and are not hit by sudden,
unexpected bills. Even the road fund tax could be included in the contract.

As well as including maintenance, the monthly price of hiring the vehicle is
fixed, rather than subject to interest rates varying on a loan. Yet another
reason why you are able to budget for the exact cost of the vehicle rather
than having to second guess what your bills may be this time in a year or
two.

Less Taxes On The Charges
Also, the supplier of the vehicle is able to reclaim the VAT on the purchase
of the vehicle initially, meaning that the price to them is lower, which in
the competitive market that we are seeing at the moment means that there is
a cost saving that they have to pass on to you, the end buyer.

Calculating Your Premium
So how is the cost of the contract hire calculated? Not an simple
calculation, but not too difficult. The cost of the vehicle to be bought
from new is taken as the starting point, less the included VAT that will be
recovered. Then the expected reduction on the vehicle for the duration of
your intended hire and leasing is worked out, based on the acquisition cost,
the length of hire and predicted mileage.

In short, this reduction plus interest charges and any optional extras is
what the total cost of your contract is going to be, which is divided over
the number of months that you intend to have the vehicle.

Obtaining your next company vehicle through car leasing can be
only what you need to reduce the costs whilst increasing the security of the
knowledge of exactly what the outlay should be.